Celanese and Degussa JV gets probed
31 Jan 2003
The European Commission is to open a detailed investigation into a proposed joint venture (JV) between German companies Celanese AG and Degussa AG.
On December 18, 2002, the Commission received notification that Celanese Chemicals Europe GmbH, a subsidiary of Celanese AG, and Degussa AG's Oxeno Olefinchemie GmbH planned to create a 50/50 joint venture in the field of propylene-based oxo chemicals in Europe.
Oxo Chemicals are primarily used as chemical intermediates, solvents and plasticizers.
The proposed joint venture would merge the commercial, technical and operational C3-oxo business activities of Celanese in Oberhausen, Germany, with those of Degussa's Oxeno subsidiary in Marl, also in Germany.
However, a preliminary investigation has revealed concerns about the effect of the JV's total market share of certain C3-oxo products in Europe - in particular, in base chemical butyraldehyde and its derivative product butanol, as well as softener 2-ethylhexanol and solvent butyl acetate.
According to the Commission, if the the joint venture went ahead, it would have market shares of between 40% and 55% of these products in Europe, well ahead of competitors BASF of Germany, Perstorp Oxo of Sweden and Atofina of France.
In an in-depth investigation, the Commission will seek to establish whether such high market shares could give the combined entity a dominant position in the European market.
The opening of an in-depth investigation is a normal step in merger reviews and does not prejudge the final decision. The Commission now has a total of four months to reach a conclusion.
